NYMEX crude trades higher near $54 per barrel Wednesday after a sharp 6.6% slide in previous session when it hit a low of $52.77/bbl, the lowest level since October 2017. Crude has now fallen more than 31% from recent highs amid oversupply concerns and demand uncertainty.
Record high US, Russia and Saudi output has kept market well supplied while US has granted exemption on Iran sanctions limiting supply effect.
OPEC in last few days have indicated that it can consider cutting crude output by 1-1.4 million barrels per day to check oversupply however market players are wary about the plan owing to resistance from Russia, a key ally in recent production cut deal. Russian Energy Minister said producers need to watch the market in the coming weeks before making any decision. IEA Executive Director Fatih Birol said cutting output may have some negative implications, appealing to all parties to "have common sense in these difficult days.
Crude fell yesterday also amid a sharp sell-off in US equity market fueled mostly by a selling in shares of technology and internet-related companies. Weaker global outlook, rising interest rates and tightening credit spreads has also hurt US markets.
Also weighing on crude is firmness in US dollar. The US dollar index rose 0.6% yesterday on safe haven buying amid increasing uncertainty about US-China trade talks, Brexit and Italy.